CENTER’S FOURTH AND FINAL STRUCTURE
– Developer Randy Heady, in partnership with John Eulich
and John Landon, will bring the fourth and final office
building to Plano’s Parkway Center. The team will break
ground on the 158,000-square-foot, six-story office
building in the next couple of weeks and plans call for
delivery next March.
speculative building will be a twin to the one purchased
by AmeriVest. Ed Henry is the project’s general
contractor. The stone and glass structure was designed
by ANPH Architects.
CNL Poised to Purchase Majority Stake in Dallas Market
a caution that the deal is still tentative, the Orlando,
FL-based CNL Income Properties Inc. has put out word
it's negotiating to buy majority interest of the
4.8-million-sf Dallas Market Center. If the deal closes,
CNL will invest up to $71 million in cash into a new
Dallas Market Center Co. Ltd., an affiliate of locally
based Crow Holdings, and CNL plan to form a partnership
with $160 million of debt and $89 million of equity,
according to a press release issued this morning. The
partnership will own part of the real estate and
leasehold improvements in the 3.1-million-sf World Trade
Center, one-million-sf Dallas Trade Mart and 440,000-sf
International Floral and Gift Center and a leasehold
interest in the 214,000-sf Market Hall.
More details will follow, but Crow is poised to turn
over up to 80% of majority interest in the center. Gina
Norris, managing director of Crow Holdings, tells
GlobeSt.com that CNL approached Crow Holdings
about nine months ago about the possibility of a buy-in.
"It has come fairly quickly for a deal of this size,"
says Norris, who's working with Anne Raymond, Crow's
managing director and CFO, to fine-tune the trade. The
closing, set to begin this quarter, is subject to CNL
securing additional offering proceeds.
CNL's release says the tentative agreement will set up
two long-term master leases with the existing management
company, Market Center Management Co. Ltd., which will
continue to manage the business, including the
world-renowned trade shows. Banc of America Securities
is CNL's financial adviser for the transaction.
"This real estate transaction provides a strong equity
partner and positively positions us for additional
opportunities to create improved markets and trade
events," Bill Winsor, Dallas Market Center's president
and CEO, says in the release. "To the extent other such
opportunities arise that align with our business
strategy, we would be pleased to further our
relationship with CNL Income Properties." Among its
mixed bag of high-profile holdings, Crow also owns the
three-million-sf Brussels International Trade Mart.
Founded in 1957, Dallas Market Center now is considered
the world's largest wholesale merchandise mart. More
than 50 trade shows are held annually, attracting at
least 200,000 visitors from 84 countries. Last year,
five floors in the World Trade Center were retooled into
Fashion Center Dallas, a state-of-the-art wholesale mart
with 550 permanent showrooms and more than 650 temporary
"Our partnership with Dallas Market Center is a good fit
with our investment strategy," R. Byron Carlock, CNL
president, says. "We're focused on this country's most
prominent demographic influence--baby boomers--who, we
believe will be spending even more of their time and
income on themselves and their families as they continue
to mature. We believe boutique and specialty shopping
will be a big part of that trend."
COMMERCIAL PROPERTY OWNERS GET TAX BREAK
WASHINGTON, D.C. (The
Wall Street Journal) – Improvements
landlords make to commercial buildings to accommodate
their tenants’ needs can be depreciated over 15 years
instead of 39 years, at least for 2005. The logic behind
the law is that leases seldom last as long as 39 years.
When new tenants move in, different improvements are
needed. This tax rule is only good through the end of
this year unless Congress reinstates it. Types of
expenses that now qualify for the more rapid
depreciation include such items as interior walls and
– The new law is especially kind to owners of leased
restaurant buildings. If a leasehold improvement
qualifies as a restaurant improvement, both a 15-year
write-off and a 50 percent first-year bonus depreciation
Nonrestaurant leaseholders lose the 50 percent
first-year bonus depreciation but gain the shorter
write-off period. An after-tax numerical analysis
comparing the old law and the new law found that most
taxpayers are worse off with the new law because they
lose the first-year bonus deduction.
FED: REAL ESTATE MARKETS NEED JOB GROWTH
DALLAS, Texas (federalreserve.gov)
– The Dallas Federal Reserve Board’s latest regional
survey (beige book) concludes that economic activity in
the 11th District, which includes Texas, continued to
expand at a moderate pace from mid-November to early
January. Demand for housing picked up from mid-November
to early January, following a cooling that was reported
in the last Beige Book.
Realtors and home builders expect a slightly slower year
in 2005, and remain focused on the need for job growth
to stimulate activity. Multifamily contacts said
market continues on the road to recovery, but
and Dallas' apartment markets have been overbuilt and
may not see improvement until mid-2005. There is still a
lot of vacant commercial space, but contacts said office
leasing continued to pick up at a slow, steady pace.
CARLSON RESTAURANTS HEADQUARTERS SPACE CHANGES HANDS
CARROLLTON, Texas (Holliday Fenoglio Fowler) –
Lexington Corporate Properties Trust, an industrial and
retail REIT, has obtained financing of $14.5 million for
the acquisition of the 130,000-square-foot corporate
headquarters of Carlson Restaurants Worldwide Inc.
Holliday Fenoglio Fowler LP arranged the financing
through Principal Global Investors.
property is a two-story, Class-A office building
developed in 2003 for Carlson. It is on nearly 12-acres
Marsh Lane. The property is adjacent to
International Business Park, just north of President
George Bush Turnpike and west of the Dallas North
ESTATE CONFIDENCE STEADY
COLLEGE STATION, Texas (recenter.tamu.edu)
– In the real estate business, the first quarter of the
year is usually slower than other quarters, and this
year, industry professionals’ modestly optimistic
expectations about first quarter 2005 are similar to
those of previous years.
latest Texas Real Estate Confidence Index (TRECI) is
.54, or slightly better than neutral. It is down
slightly (.01) from the fourth quarter survey but up a
bit (.02) from the survey done one year ago.
various real estate sectors are quite divergent in their
business outlook,” notes Dr. James H. Leigh, TRECI
project director and associate research scientist for
the Real Estate Center at Texas A&M University. “While
the commercial lender panel was very optimistic with a
TRECI number of .83, the mortgage lenders had a negative
reading of .34.”
For more information, click on TRECI on the Real Estate
BANNER YEAR FOR
– According to a report released Wednesday from Colliers
Oxford Commercial, 2004 marked a significant rebound for
the Austin office market, as it posted the first net
gain in occupancy since 2000. Both occupancy and rents
rose in 2004 as about 1.2 million more square feet of
office space was rented than was put on the market.
Average overall occupancy in fourth quarter 2004 was the
highest since 2001 at almost 81 percent. Average rent
rose 75 cents to $18.76 per square foot. Subleases,
which proliferated after the tech bust, dropped 45
percent to 760,000 square feet of available space. In
all, almost 7 million square feet of office space
remains on the market.
WATERWAY SUBLEASE SNATCHED UP BY HUNTSMAN
WOODLANDS, Texas (GlobeSt.com)
– Salt Lake City-based Huntsman LLC has subleased more
than 26,000 square feet from Pantellos Group LP through
2006 in the 366,000-square-foot, Class-A Waterway Plaza
office complex. The sublease brings the office complex
Woodloch Forest Drive to 96 percent occupancy. Pantellos
has signed a long-term lease for its remaining 18,000
square feet in Waterway Plaza II, while Huntsman will
incorporate the subleased space into its long-term plans
after its expiration.
AUSSIE FIRM ACQUIRES RETAIL CENTERS
IRVING, Texas (GlobeSt.com)
– Macquarie DDR Trust has purchased a 14 percent
interest in two shopping centers for about $64 million
from Developers Diversified Realty. The centers are
Aurora, Colo., and Irving, Texas. The sale is the result
of a plan and joint venture between the two companies
that will lead to the sale of several properties to
MacArthur Marketplace in
Irving, an almost 250,000-square-foot retail complex, is
anchored by a Wal-Mart Supercenter, Sam’s Club, Kohl’s,
Marquee Cinemas, Office Max and PetsMart. Neither the
Wal-Mart nor the Sam’s Club were included in the
Project Revving Up for Las Colinas Retail Corner
Ground will break within two months on a 28,000-sf tract
at a high-traffic intersection in Las Colinas, where
dirt is fetching $8 per sf to as much as $25 per sf. The
soon-to-start project, a 6,000-sf retail building, is
60% pre-leased. The tract is the only open corner at
the intersection of Cimarron Trail and MacArthur
Boulevard. Great Lakes' neighbors are an upscale
multifamily development, shopping center and high-end
Portrait of a recovery
Brighter picture emerges as D-FW firms shake off dreary
Dallas-Fort Worth's biggest companies, the dreary
economic landscape of the last three years is turning
into a brilliant watercolor.
struggling with sliding profits and sales, many of these
firms swung back into the black last year. Others
sharply cut their losses. And for many firms, 2004 could
be the year they stanch the flow of red ink.
"Somewhere in the middle of 2003 was an inflection point
where things began to get legs," said Mark Layton, chief
executive of PFSweb Inc., a Plano-based provider of
distribution, call center and back-office services that
is in the midst of a turnaround.
the first time since 2000, the 200 biggest publicly held
companies in Dallas-Fort Worth saw their combined
profits and sales increase.
group's total net income last year nearly tripled to
$25.6 billion, up from $8.6 billion in 2002.
Meanwhile, the combined revenue climbed almost 6 percent
to $500.5 billion.
sure, Irving-based Exxon Mobil Corp. accounted for 84
percent of the group's total profits. But even excluding
the oil behemoth, the rest of the area's largest firms
earned $4.1 billion, a level not seen since 2000.
numbers suggest an economic recovery in the making,
are just seeing the stirrings of growth now," said Mine
Yücel, a senior economist and vice president at the
Federal Reserve Bank of Dallas.
rebound hasn't yet spread to all industries. Some of the
local sectors still limping along include technology,
manufacturing and information (broadcasting, Internet
and printing businesses). Transportation, a leading
source of employment in Dallas-Fort Worth, has shown
Ms. Yücel dismisses any doubts that the economy has
turned the corner.
year, we weren't quite sure yet," she said. "We think
the future holds positive growth for us."
kind of confidence is playing out in boardrooms across
the area. Companies emerging from the downturn have shed
unprofitable or secondary lines of businesses and are
concentrating on what they do best.
"Companies that have survived have really got a very
clearly stated and focused business strategy," said John
Slocum, a professor of organizational behavior at
Southern Methodist University's Cox School of Business.
improving economy is encouraging many firms to take
risks they had shunned in the past. Some are hiring
workers – albeit slowly and carefully. Between the end
of 2000 and December 2003, the Dallas-Fort Worth area
lost about 132,300 jobs, according to a recent report by
the Federal Reserve Bank of Dallas. And total employment
among companies in the Top 200 declined about 9 percent
March marked the sixth straight month of job growth in
Texas, according to the Texas Workforce Commission. And
Dallas' unemployment rate, which climbed to 8.1 percent
in June 2003, has been dropping. It stood at 6.2 percent
comeback is particularly evident in the Oil Patch, where
surging prices for oil and natural gas have created a
windfall for many firms. Several oil and natural gas
companies made big advances in this year's D-FW Top 200
list, a ranking by revenue of the area's biggest
publicly traded companies.
them: Pioneer Natural Resources Co. Profit at the oil
and gas exploration and production company increased
15-fold last year, on top of an 83 percent jump in
revenue. Pioneer's balance sheet is so strong that in
April it began paying its shareholders a dividend.
cash flow is up significantly in 2003 and 2004," said
Scott Sheffield, Pioneer's chairman and chief executive.
"We're investing a lot more money."
Pioneer is adding employees at its Dallas headquarters
and has opened an office in Anchorage, Alaska. It's also
planning to drill more than 400 wells, up a little from
oil and gas companies aren't the only ones savoring
better times. Growing demand for digital signal
processors and other chips led Texas Instruments Inc. to
start budgeting this year for employee profit-sharing
payouts. That didn't happen the last two years.
a $344 million loss in 2002, TI earned $1.2 billion last
year. It's boosting spending on research and
development, adding capacity for assembly and test
capabilities, and making other investments. Already, it
is projecting that capital expenditures this year will
rise 18 percent more than originally estimated.
TI, SWS Group, the owner of Southwest Securities Inc.
and other financial services firms, saw a return to
profitability in 2003, thanks in part to renewed
investor enthusiasm for the stock market.
times caused SWS executives to concentrate on the
company's core businesses, getting rid of everything
else. The company sold off a technology services
subsidiary and Mydiscountbroker.com, its retail online
was really a chance to get more focused on areas where
we felt we had a competitive advantage," said Donald
Hultgren, SWS' chief executive.
Dallas-based company is pouring new resources into its
investment banking and retail operations. It opened
offices in Oklahoma City, Houston and Austin. And it's
adding two financial advisers a month at Southwest
Rising sales and profits aren't the only evidence of a
200 largest Dallas-Fort Worth companies also experienced
an increase in their market capitalization, a new
measure added to the rankings this year. Market
capitalization is the value of a corporation determined
by the number of outstanding shares multiplied by the
current market price of each share.
market capitalization of the D-FW Top 200 stood at
$537.5 billion in 2003, with Exxon Mobil accounting for
roughly half the value. Excluding the petroleum giant,
the market capitalization of the rest of the group was
many firms, the economy has gained steam so rapidly that
a new set of worries has cropped up: the prospect of
higher interest rates and soaring commodity prices.
only issue that has really put a little bit of a cloud
over us is the price of natural gas," said Robert Best,
chairman and chief executive of Atmos Energy Corp., a
Dallas-based natural gas distributor serving utility
customers in 12 states.
natural gas prices spike, Atmos passes on the price
increases to consumers. But that usually causes demand
to fall, reducing Atmos' earnings.
Unlike many firms, Atmos bucked the recent downturn by
continuing to grow its profits over the last few years.
It has invested in new technologies and digested four
acquisitions since 2000.
not all companies fared as well. The shrinking size of
firms in this year's Top 200 list made competition in
the corporate world seem every bit as brutal as an
immunity challenge on the television show Survivor
took sales of only $1.3 million to make this year's
list, compared with $2.2 million a year ago. Five
companies on last year's list, including former No. 5,
grocery distributor Fleming Cos., wound up in bankruptcy
court and out of the rankings.
Acquisitions and mergers also led to the departure of
several local companies from this year's list, including
Hotels.com, Hispanic Broadcasting Corp. and Packaged Ice
Inc. And a few firms, such as former No. 20 Lennox
International Inc., failed to stay in the rankings
because of delays in filing their year-end financial
Still, a number of companies were well on their way to a
turnaround last year, including AMR Corp., the parent
company of American Airlines Inc.
improvements were as striking as that of PFSweb. The
outsourcing provider made the biggest leap in this
year's Top 200 rankings, soaring to No. 76 from No. 116
last year as its revenue more than tripled.
Driving the sales gain: a profitable acquisition in late
2002, a strengthening economy and new customers. As a
result, the firm's losses dwindled to $3.7 million from
$11.4 million in 2002.
far, PFSweb's investments in new technology appear to be
paying off. In February, it announced it had won five
new clients and renewed three key contracts.
target is to show profitability this year," said
PFSweb's Mr. Layton, noting that clients are expanding
their products into new geographical markets.
getting back into the black isn't enough for some
companies itching to return to their glory days.
TXU Corp., new chief executive John Wilder inherited a
utility that transformed a $4.2 billion loss in 2002
into a $560 million profit last year. Still, he warned
that it will take two to three years for TXU to
completely turn things around and regain its position as
one of the nation's top power and gas companies.
still have a good ways to go," Mr. Wilder said. "We have
to build this company as a high-performing industrial
company. We're not there yet."
focus on its core electricity operations, TXU is
shedding a number of businesses, including telecom,
energy management outsourcing and gas transportation.
The sales will enable the company to reduce by almost
half its $12 billion debt.
"We've got great people here," Mr. Wilder said. "They
know what needs to be done."